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CU-backed Bonamici wins House seat

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WASHINGTON (2/2/12)--Suzanne Bonamici (D-Ore.), who touted increased member business lending (MBL) for credit unions as part of her platform, easily defeated Republican opponent Rob Cornilles in Tuesday's special election for Oregon First District U.S. House seat, garnering 53.8% of the total vote.

Bonamici made her support for member business lending a key part of her campaign and platform, telling a local television station that supporting MBL legislation would be one of her first acts after she took office. She also promoted increasing the MBL cap in a YouTube video. (See Jan. 31 story, Bonamici touts MBLs in House-seat contest.)

Click to view larger image Northwest Credit Union Association representatives and credit union supporters pose with special election winner Suzanne Bonamici (second from right). Bonamici has pledged to support MBL cap increase legislation, as she did during her campaign, once she is sworn in to Congress later this month. (Northwest Credit Union Association photo)
Northwest Credit Union Association (NWCUA) Director of Legislative Advocacy Jennifer Wagner said the association is grateful for Bonamici's early support of raising the MBL cap, and looks forward to working with her. "In Suzanne Bonamici, we will have a champion who supports credit unions and their members," she added.

The NWCUA and the Credit Union National Association (CUNA) supported the long-time credit union backer in the Democratic primary and the more recent special election, and Oregon credit unions backed Bonamici with phone bank and neighborhood canvassing efforts. Oregon credit unions, and CUNA's Credit Union Legislative Action Council (CULAC), also financially backed her campaign.

Bonamici has said she is "honored" by the chance to serve her district, and said she would focus on job creation, ensuring small businesses have access to funding, and promoting balanced consumer protection laws once she takes office. She will replace former Rep. David Wu (D), who resigned last year.

The newly elected congresswoman is expected to be sworn in soon, and will need to run again in November's general elections to maintain her seat.

Oregon's first district extends from the greater Portland area into Yamhill, Washington, and Columbia counties, as well as the coastal county of Clatsop. It is a largely Democratic district. Half of the district's 414,515 registered voters cast ballots in the special election.

CUNA backs NCUA opposes exam fairness bill

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WASHINGTON (2/2/12)--The Financial Institution Examination Fairness and Reform Act (H.R. 3461) is  "a firm step in the right direction toward ensuring the federal financial institution regulatory agencies conduct fair exams, which are consistent with the law and regulation and ensure safety and soundness," West Virginia Credit Union League President/CEO Ken Watts said during a Wednesday House hearing. He was testifying on behalf of the Credit Union National Association (CUNA).

Click to view larger image West Virginia Credit Union League President/CEO Ken Watts (left) and NCUA Executive Director David Marquis (right) presented differing views during Wednesday's House subcommittee hearing on a bill intended to reform the federal financial institution examination process. (CUNA Photo)
The hearing featured two witness panels: One was comprised of Watts and other financial industry representatives who supported examinations reforms, and the other was comprised of federal financial institutions regulators, such as National Credit Union Administration (NCUA) Executive Director David Marquis, who did not support the bill as written.

The exam bill that was under scrutiny by the House Financial Services subcommittee on financial institutions would allow credit unions and other institutions to discuss examination concerns with a newly created Federal Financial Institution Examination Council (FFIEC) ombudsman, and to appeal regulator decisions before an independent administrative law judge.

The bill would also give credit unions and other financial institutions access to decision-making information gathered in their exams and codify exam policy guidance for financial regulators.

Watts said H.R. 3461 would not solve all of the examiner issues that credit unions face, but added the attention that the U.S. Congress gives to examination issues "will lead the NCUA and the other regulators to take steps to ensure that examiners treat credit unions fairly and that they acknowledge credit unions should have the flexibility to manage risk, consistent with legal and supervisory requirements."

Watts said that credit unions often do not voice their concerns related to the examination process due to the fear of retaliation from regulators. However, he added, the proposed creation of a third-party regulatory appeals process would create a "much improved" examination process for credit unions.

H.R. 3461 could be further strengthened, Watts said, by such additions as easing institutions' access to information that regulators use to make their material supervisory determinations and revising some exam standards.

He also recommended that the subcommittee add language to the bill that would direct regulators to identify additional costs associated with implementing H.R. 3461, and reduce their expenditures elsewhere within their budgets by the same amount.

Total implementation costs should also be divided between all financial industry regulators on a pro-rata basis so the NCUA, and, in turn, credit unions, do not pay for costs incurred by other regulators, he added. Legislators should also revise portions of the bill to better address the structural differences between credit unions and other institutions, Watts said.

Marquis testified that his agency recognizes that its examination process "can be improved and enhanced," but he warned that the bill could increase administrative costs, create new risks to the National Credit Union Share Insurance Fund, and impose "a one-size-fits-all approach" to financial institution examinations.

Marquis noted that the NCUA has already adopted a number of examination practices that fall in line with H.R. 3461, and said the NCUA is "committed to addressing legitimate concerns about the present exam process, minimizing regulatory conflicts, promoting procedural fairness, and advancing exam consistency."

Many of the legislators in attendance noted the need for regulatory examination improvements, with Rep. Ruben Hinojosa (D-Texas) saying that credit unions did not cause the financial crisis, and should not be stifled by overzealous regulators.

Other legislators, including Reps. Blaine Luetkemeyer (R-Mo.), Mel Watt (D-N.C.) and Don Manzullo (R-Ill.), called for reduced regulatory burdens for credit unions and other institutions.

H.R. 3461 is co-sponsored by the subcommittee chair, Rep. Shelly Moore Capito (R-W. Va.), and its ranking member, Rep. Carolyn Maloney (D-N.Y.) The bill has 77 co-sponsors.

JetStream FCU President/CEO Jeanne Kucey also testified, representing the National Association of Federal Credit Unions.

For more on Wednesday's hearing, use the resource link.

New plans to help underwater homeowners

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WASHINGTON (2/2/12)--Following up on statements made during his 2012 State of the Union address (News Now Jan. 25), President Barack Obama Wednesday released details of a new plan to help underwater homeowners and address ongoing difficulties in the housing market.

The president announced his "Plan to Help Responsible Homeowners and Heal the Housing Market" initiative saying it would "give every responsible homeowner in America the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates."

"No more red tape. No more runaround from the banks. And a small fee on the largest financial institutions will make sure it doesn't add to our deficit," he said.

Obama also unveiled a series of other steps the administration will take to boost the housing market by helping distressed mortgage holders. For instance, he announced that the U.S. Department of Agriculture (USDA) and the Federal Housing Administration (FHA) are working to implement a low-cost, streamlined refinancing program enabling borrowers to make better use of today's low mortgage rates. 

Under this plan, FHA and UDSA borrowers must demonstrate they are current on their loans, but USDA is eliminating the need for a new appraisal, new credit report, and other documentation currently required in a refinancing.

FHA is removing loans from its "Compare Ratio," which is the process by which lenders' performance is reviewed.  This would make it possible for lenders to refinance loans for eligible borrowers without compromising their status as FHA-approved lenders. 

The administration's broad new plan to help underwater borrowers would require congressional action before it could be established. However, changes to existing rules, like the UDSA and FHA changes, could go ahead with action by the agencies involved.

Credit Union National Association General Counsel Eric Richard noted after the president's announcement that while the initiatives are not addressed specifically to credit unions, as active mortgage lenders and services, credit unions certainly would be affected by the programs.

Use the resource links below for more information on the administration's plans.

Inside Washington (02/01/2012)

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  • WASHINGTON (2/2/12)—U.S. Reps. Spencer Bachus (R-Ala.) and Shelley Moore Capito (R-W.Va.) sent a letter to the Consumer Financial Protection Bureau Tuesday requesting the agency to stop collected privileged information from financial institutions until Congress can determine if that information is protected (American Banker Feb. 1). The House Financial Services subcommittee on financial institutions and consumer credit will hold a hearing to address the issue, the letter said. Bachus chairs the House Financial Services Committee and Capito chairs the financial institutions subcommittee. Disclosing information could be considered a waiver of attorney-client privilege, and expose financial institutions to third-party subpoenas, Bachus and Capito said in the letter …
  • WASHINGTON (2/2/12)--The Federal Deposit Insurance Corp. Tuesday issued guidance on potential risks associated with third-party payments processors. The letter to financial institutions said certain types of payment processors may pose heightened money laundering and fraud risks if merchant client identities are not verified and business practices are not reviewed. Banks should evaluate their risk assessment program, be alert to consumer complaints, and act promptly when fraudulent or improper activities occur. "At a minimum, board-approved policies and programs should assess the financial institution's risk tolerance for this type of activity, verify the legitimacy of the payment processor's business operations, determine the character of the payment processor's ownership, and ensure ongoing monitoring of payment processor relationships for suspicious activity," the letter said …

Small biz backs more MBLs CUNA reminds lawmakers

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WASHINGTON (2/2/12)--Credit unions stood with their small business-owning members during the recent financial crisis, continuing to lend when others pulled back, and now approximately 525 are approaching the 12.25%-of-assets member business lending cap (MBL), the Credit Union National Association (CUNA) said in a letter sent to the top members of the House Small Business Committee Wednesday.

The letter to Chairman Sam Graves (R-Mo.) and ranking member Nydia Velazquez (D-N.Y. ) was sent in conjunction with the committee's hearing entitled, "The Path to Job Creation: The State of American Small Businesses." In it, CUNA President/CEO Bill Cheney urged the U.S. Congress to enact pending legislation that would raise the MBL cap to 27.5% of total assets. 

"The need for Congress to enact this legislation is clear," Cheney stated. He said a recent survey by the Small Business Majority, Main Street Alliance and the American Sustainable Business Council showed that 64% of small business owners say that the availability of credit is a serious or fairly serious problem  (News Now Jan. 27).

"Sixty-one percent say that it is harder today to get a small business loan than it was four years ago.  Ninety percent support making it easier for community banks and credit unions to lend to small businesses," Cheney noted. 

In fact, the Cheney letter went on to say, the only groups that oppose credit union business lending represent the banks that have pulled back access to credit when small businesses needed it the most, and have taken taxpayer money intended for small business lending and repaid their TARP obligations.  

From December 2007 until September 2011, credit union business loan portfolios increased over 42% while bank small business loans decreased by over 14%, according to call report data from the Federal Deposit Insurance Corp. and the National Credit Union Administration.

"Meeting the credit needs of entrepreneurial members is part of credit unions' DNA," Cheney told the lawmakers.  He reiterated that current legislation to increase the MBL cap would permit credit unions to lend an additional $13 billion to small businesses in the first year after enactment and help them to create 140,000 new jobs.

That boost to small business and the U.S. economy, Cheney reminded, would come at no cost to taxpayers.